[173661] in North American Network Operators' Group
Re: Netflix To Cogent To World
daemon@ATHENA.MIT.EDU (Owen DeLong)
Wed Jul 30 12:24:56 2014
X-Original-To: nanog@nanog.org
From: Owen DeLong <owen@delong.com>
In-Reply-To: <201407300916.28662.mark.tinka@seacom.mu>
Date: Wed, 30 Jul 2014 09:21:46 -0700
To: mark.tinka@seacom.mu
Cc: nanog@nanog.org
Errors-To: nanog-bounces@nanog.org
> There really is very little reason why certain major content=20
> owners and providers who operate their own IP networks=20
> cannot turn around and become full-blown wholesale ISP's=20
> (and in some cases, consumer ISP's).
>=20
> As a transit provider industry, we need to get our act=20
> together and play nice, before we all get run over by the=20
> content owners. They will not hesitate to take us out of the=20
> equation the first chance they get.
Yes and no=85
The barrier to Netflix becoming a consumer ISP is very high=85 Very very =
high. It costs a lot of money to deploy all that last mile =
infrastructure, assuming you can get permits, acquire rights-of-way, =
etc. to even do it.
Much of the current consumer ISP infrastructure happens to be owned by =
content providers that Netflix is competing with. The rest is largely =
owned by other content providers that are attempting to compete with =
Netflix _AND_ the other content providers. ($CABLECOs (e.g. Cox, Time =
Warner, et. al.) in the former case and $TELCOs (e.g. FIOS, uVerse, et. =
al.) in the latter).
In the US, at least, both $CABLECOs and $TELCOs look more like law firms =
than communications companies if you analyze their business models. They =
seem to spend most of their time seeking ways to create a regulatory =
environment that favors them and disadvantages their competition rather =
than focusing on customer service and innovation to gain better profits. =
For the most part, their ability to do harm is somewhat limited by the =
fact that their interests largely run contrary to each other, so you =
have roughly equal forces fighting for legislation and rulings in =
roughly opposite directions.
Unfortunately, when they agree, it is almost certainly the consumer that =
loses and loses big.
The current situation with Netflix (and other content providers) is one =
such example. One of the few things they can agree on is that it is =
easier for them to try and extort money from content producers that =
compete with them than it is to change their business model to account =
for the true costs of providing what they promised.
One interesting thing about this in my opinion is that the worst =
consequence if they get their wish (the Slow Lane proposal, as I call =
it), the worst effect on consumers is an unintended side-effect. It will =
create an additional set of entry barriers for companies attempting to =
compete with Netflix and other content providers that have sufficient =
resources to pay the =93exit the slow lane extortion=94.
So not only is this bad for consumers by raising the cost of their =
content services by a factor of $ISP_EXTORTION+MARKUP, but it=92s also =
bad for consumers by creating a new barrier to competition in an area of =
the market that was previously more open.
Owen
